Dow Jones Futures Fall, Crude Oil Tumbles With Market Rally At Highs; Tesla Cybertruck Delayed

Dow Jones futures and S&P 500 futures fell slightly Monday morning, as crude oil prices fell sharply. Nasdaq futures edged higher. The major indexes all hit record highs last week as the stock market rally advanced modestly amid heavy earnings and key economic data.


Apple stock, Wells Fargo (WFC), Tesla (TSLA), Snap (SNAP), Square (SQ) and Cleveland-Cliffs (CLF) are all in or near buy zones after last week. Meanwhile, Tesla has officially pushed Cybertruck production to 2022, but shares rose amid an analyst upgrade.

Earnings season is still active. Warren Buffett’s Berkshire Hathaway (BRKB) reported better-than-expected Q2 profit growth on Saturday. BRKB stock rose slightly in premarket trading, actionable from an early entry after clearing its 50-day line on Friday.

BioNTech (BNTX) reported blowout Q2 results while Elanco (ELAN) narrowly beat before Monday’s open. Trade Desk (TTD) also is on tap before the open. BNTX stock, greatly extended from a buy point, edged higher early Monday. Elan stock fell modestly before the open after finding 50-day support last week after retreating modestly from a still-valid buy point. TTD stock arguably is in range from an early entry, but a strong earnings move could leave it between buy points.

Keep an eye on Exact Sciences (EXAS) and Invitae (NVTA). Reports after Friday’s close said Exact Sciences is approaching genetic testing firm Invitae about a merger. EXAS stock fell solidly early Monday. NVTA popped more than 5%. Both are well off their highs and near 2021 lows.

Wells Fargo, BioNTech, Square, Tesla and Snap stock are all on IBD Leaderboard. Tesla stock, Snap and Square also are on SwingTrader. Square stock and Snap are on the IBD 50. WFC stock was Friday’s IBD Stock Of The Day. SQ stock and Snap also were Stock Of The Day selections last week.

As for Apple (AAPL), it’s merely the world’s most valuable company, with a $2.42 trillion market cap, and a member of the Dow Jones, S&P 500 and Nasdaq composite.

The video embedded in this article analyzes Wells Fargo, Square and CLF stock, as well as reviewing the week’s stock market action.

Dow Jones Futures Today

Dow Jones futures fell 0.3% vs. fair value. S&P 500 futures sank 0.2% and Nasdaq 100 futures climbed 0.1%.

U.S. crude oil futures fell 4% early Monday as concerns grow that rising Covid cases and restrictions will sap energy demand. Goldman Sachs and JPMorgan have cut Chinese GDP growth targets. China has imposed sweeping curbs in reaction to various outbreaks, though the official number of cases is only in the hundreds. Crude oil prices tumbled last week.

Copper prices slid more than 1% in premarket trading.

Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.

Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live

Coronavirus News

Coronavirus cases worldwide reached 203.59 million. Covid-19 deaths topped 4.31 million.

Coronavirus cases in the U.S. have hit 36.54 million, with deaths above 633,000.

New U.S. Covid cases topped 130,000 on Friday, a six-month high, as the delta coronavirus variant spreads rapidly. But the vast majority of hospitalizations and deaths are among non-vaccinated Americans. Meanwhile, Covid fears and restrictions have spurred a big increase in vaccinations over the last few weeks, especially in areas with low immunization rates.

The increase in vaccinations, as well as moves toward backing booster shots, has sent Moderna (MRNA) and BNTX stock surging over the last several weeks.

Stock Market Rally

The stock market rally ended up with solid gains on the major indexes, all hitting record highs.

The Dow Jones Industrial Average rose 0.8% in last week’s stock market trading. The S&P 500 index climbed 0.9%. The Nasdaq composite popped 1.1% The small-cap Russell 2000 also advanced 1.1%.

The 10-year Treasury yield, after tumbling to 1.13% during the week, rose 5 basis points to 1.29%. That includes a 7 basis point gain Friday on the July jobs report.

Top ETFs

Among the best ETFs, the Innovator IBD 50 ETF (FFTY) rose 2.2% last week, while the Innovator IBD Breakout Opportunities ETF (BOUT) gained 1.4%. The iShares Expanded Tech-Software Sector ETF (IGV) advanced 1.6%. The VanEck Vectors Semiconductor ETF (SMH) climbed 2.1%.

SPDR S&P Metals & Mining ETF (XME) slumped 3.2%, though steel names generally had constructive pullbacks. The Global X U.S. Infrastructure Development ETF (PAVE) edged up 0.2%. U.S. Global Jets ETF (JETS) climbed 1%. SPDR S&P Homebuilders ETF (XHB) edged up 0.5%. The Energy Select SPDR ETF (XLE) nudged 0.3% higher. The Financial Select SPDR ETF (XLF) popped 3.7%, with much of that coming on Friday.

Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) rose 2.5% last week and ARK Genomics ETF (ARKG) 3.1%, despite Friday retreats. Tesla stock is the No. 1 holding across ARK Invest’s ETFs. SQ stock is another top ARK holding. However, ARK has been paring its TSLA stock and Square holdings in the past couple of weeks. EXAS stock is a top-five ARKG holding.

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Apple Stock

Apple stock edged up 0.2% to 146.14 last week, continuing to consolidate in declining volume. Shares are slightly extended from a 137.17 cup-with-handle buy point, according to MarketSmith. But it’s within range of a larger consolidation going back to late January, with a 145.19 entry. AAPL stock has been moving sideways in a fairly narrow range since hitting an all-time high 150 on July 15.

Investors could use 150.10 as an alternate buy point. This could develop into a flat base.

Wells Fargo Stock

WFC stock jumped 6.2% to 48.77. The banking giant jumped 3.8% on Friday, clearing a 48.23 buy point in above-average volume. Higher Treasury yields were the catalyst Friday for the lending giant, but Wells Fargo was holding up relatively well in recent weeks when the 10-year yield was tumbling. The relative strength line for WFC stock is improving, though below its 52-week high.

Several other banks broke out or flashed buy signals Friday, including Goldman Sachs (GS).

Cleveland-Cliffs Stock

Cleveland-Cliffs stock pulled back this week from a buy point, but found support around an early entry of 23.55 and has now forged a high handle. Shares fell 3.9% last week to 24.02, but pared losses with Friday’s 3% gain. Investors could buy CLF stock as it breaks the handle’s downtrend, or as it regains the official 24.87 buy point or even 25.93, just above the high handle.

Several other steel stocks made similar moves, consolidating gains around buy points, including ArcelorMittal (MT) and Nucor (NUE). The VanEck Vectors Steel ETF (SLX) has a similar pattern.

Square Stock

Square stock surged 11.3% to 275.10 this past week in heavy volume amid strong earnings and a deal to buy Afterpay for $29 billion. The up days were much bigger in terms of price and volume than the down days. Square stock is still actionable, even though it’s arguably between two buy points at 267.87 and 283.29.

Snap Stock

The Snapchat parent has consolidated since gapping above an earlier consolidation following earnings in late July. Snap stock pulled back to the top of that base and its 10-day line, then rebounded on Wednesday. Investors could use 75.79, just above Tuesday’s intraday high, as an entry. A close below Tuesday’s low of 71.87 could serve as an exit.

Tesla Stock

Tesla stock rose 1.7% to 699.10 last week, but actually hit its weekly intraday high of 726.94 on Monday as it cleared a 700.10 early entry. On Friday, shares slumped 2.2%, dipping below that buy point. The volume in Friday’s decline was low, compared to a 9.7% three-day rebound from the 200-day line. That 3-day run pushed TSLA stock above a trend line entry, which remains intact, as well as the subsequent 700.10 resistance area. Both of those entry points are aggressive, in the lower half of a deep base. A less-aggressive early entry would be 780.29, just above the April 14 high.

If one views the April high as the start of a cup base within the larger consolidation, then one could view the past week as the start of a handle. But TSLA stock could use a little more of a pullback to shake out weak holders.

Tesla stock rose nearly 2% before the open. Jefferies upgraded Tesla to a buy, raising its price target to 850 from 700.

Tesla Cybertruck Delayed

The company’s website now states that Tesla Cybertruck production won’t occur before 2022. That’s not a big surprise. In the Q2 earnings report, Tesla delayed production of its EV big-rig Semi, again, to next year. The EV giant also stated that when the Austin plant is ready later this year, it’ll start with Model Y production followed by the Cybertruck.

Both the Semi and Cybertruck likely need big battery tech advances to meet their claimed specs. On the Q2 earnings call, CEO Elon Musk signaled that the 4680 battery cell wasn’t ready for mass production, citing some technical challenges.

Investors will get a look at Tesla’s China sales and exports for July as part of industry trade data for EV and overall deliveries. Tesla is exporting the made-in-China Model Y to Europe for the first time.

Market Rally Analysis

The major indexes rallied to record highs during the week after testing their 21-day moving averages. Growth stocks led most of the way, but the July jobs report on Friday pushed up Treasury yields and raised economic hopes. That lifted financials and a lot recovery sectors while weighing on highly valued techs, notably software.

The Nasdaq didn’t fall that much on Friday. ARK ETFs better reflected the weakness in growth names, but ARKK and ARKG still had strong weekly gains.

The Russell 2000 had a strong gain, though it remains stuck below its 50-day line. Market breadth remains relatively narrow.

If the Russell 2000 can trend above that key level while the major indexes rise at a steady pace and avoid getting extended, the rally should be in good shape.

Leading stocks generally had a good week, though some wild swings, often tied to earnings, may have whipsawed investors.

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What To Do Now

Review your holdings. Are they in good shape? Is your portfolio well balanced? Your watchlists may need some serious revision after the waves of earnings reports.

It’s probably a good idea to diversify, especially if you’re overweight highly valued growth stocks. Sector rotation remains while a rising yield environment probably wouldn’t be great for high PE names.

So consider financials, steel makers as well as medicals. Consider including a Long-Term Leader to reduce volatility.

Try to buy as early as possible and be cautious with add-on purchases. Making small add-on buys can be a way to slowly build up a position in a winning stock. But in a choppy, slow-moving rally, buying a stock after it’s run up 10%-20%-30% has more risks.

A number of software stocks, such as CrowdStrike (CRWD) and Shopify (SHOP), made big moves from early entries. As they’ve gotten to highs they’ve flashed buy signals at various times but have trended sideways. That doesn’t mean they won’t move higher again. But make sure any buys are relatively small and you have an exit strategy for those additional shares.

Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.

Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.


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